There are 5 key advantages of investing in mutual funds:- 1. Risk Diversification: Mutual funds help investors diversify their risks by investing in a fairly portfolio of stocks across different sectors. A diversified portfolio reduces risks associated with individual stocks or specific sectors. If an equity investor were to create a well diversified portfolio by directly investing in stocks it would require a large capital outlay. On the other hand mutual fund investors can buy units of a diversified equity fund with an investment as low as र 5,000/- only (even lower for ELSS funds). Further mutual funds are managed by professional fund managers who are experts in picking the right stocks to get the best risk adjusted returns. Retail investors often lack this expertise. 2. Economies of scale in transaction costs: Since mutual funds buy and sell securities in large volumes transaction costs on a per unit basis is much lower than buying or selling stocks directly. 3. ...